Regional Market Drivers

The states of Arizona, Colorado, New Mexico, and Utah (also known as the four corners states), as well as Nevada and Wyoming, comprise a region of the Western United States known for vast expanses of land between population centers, hundreds of miles of transmission lines, and rich wind resources. Wind energy deployment within these six states has steadily increased over the past 10 years and provided numerous economic benefits to small communities. For example, rural landowners receive lease payments of up to $120,000 over a 20-year period for each wind turbine installed on their property, and local governments receive increased tax revenues benefiting rural communities. Utilities and ratepayers are also benefiting from locally generated, low-cost wind energy. Even with the steady growth of the wind industry in this western region, the technical potential for wind development within each state demonstrates that there is still significant opportunity for continued market growth, as illustrated by the chart below.

AZ

CO

NM

UT

NV

WY

Installed Wind (2002) (MW)

0

61

1

0

0

141

Installed Wind (2015) (MW)

238

2,593

812

327

152

1410

Potential Wind Capacity (MW)

10,904

387,220

492,083

13,103

7,247

552,072

Installed Percentage of Capacity

2.20%

0.67%

0.17%

2.50%

2.10%

0.25%

The six western states assigned to the 4CWRC contain a mix of utility-scale and distributed wind deployment, with utility-scale wind representing the majority of the capacity installed in each of the states. Unique to the West, the rural character of the states and low population density (outside of urban areas) allow for deployment of small and community-scale wind systems, which provide energy for homes, ranches, schools, and farms. However, uptake in these smaller markets has been less prominent compared to the large-scale wind sector.

The six states in the region share some market similarities and face similar challenges to development and deployment, but differing state policies and utility regulations have a notable impact on the market barriers and opportunities in each state. The chart below summarizes several of the primary market drivers.

The combination of these market drivers has a considerable impact on the opportunities and challenges facing each state. With the exception of Wyoming1, the states with more proactive market drivers have seen more market growth over the past few years. Other key issues that have a significant influence on wind power development include:

Access to available transmission capacity and viable interconnection points on existing lines

Permitting, zoning and wind ordinance issues

Siting issues on federal land, including federal land with military airspace or other military constraints

Wildlife and endangered species

Integration issues and integration cost studies

Hour-ahead markets (Note: with the recent agreement to develop an Energy Imbalance Market (EIM) between PacifiCorp and CAISO, this issue will be rapidly evolving in Nevada, Utah and other western PacifiCorp states.)

Collaborating regionally allows us to leverage the experience of states with more historic wind deployment, like Colorado, Wyoming, and New Mexico, to expand the markets in Utah, Nevada, Arizona, and tribal lands. Additionally, the commonalities among the states enable a centralized approach to addressing wind barriers that further leverages resources and efforts within the region. For example, as the region experiences increasing droughts and water shortages, both of which are exacerbated by climate change, the arid southwest states share an interest in water conservation and water-wise energy resources. Similarly, air quality and haze issues relating to the region’s fossil fuel-intensive energy mix is an increasingly critical issue for the four corners states, Nevada, and Wyoming. Also, in light of emerging federal regulations on greenhouse gas emissions from power plants, reducing the carbon intensity of the western generation mix is increasingly pertinent. As such, our collaborative efforts focus on promoting the water-saving, air quality, and climate mitigation benefits of wind energy and the ripe opportunities this resource provides to meet the West’s growing energy needs. Furthermore, our coordination and engagement on relevant western regional transmission, integration, and interconnection issues, including the implementation of the EIM, supports regional and national efforts to address these key barriers to expanding the western wind market.

1 Despite an absence of market drivers and the imposition of a wind energy tax, Wyoming is the exception due to its top ranked wind resource with high capacity factor.